Reliability and affordability will be key to California’s efforts to reduce greenhouse gas (GHG) emissions, according to a new policy paper by the California Municipal Utilities Association (CMUA).
Reaching California’s target of 100 percent clean energy by 2045 rests on four principles: predictability, reliability, affordability, and flexibility, the paper, Powering California’s Future with Clean, Affordable and Reliable Energy: Four Principles for Success, argues.
“Part of our mission is to be a thought leader,” Barry Moline, executive director of CMUA, said. “We have a responsibility to put good ideas in front of policy makers and to set standards going forward. We are part of the solution and need to be part of the solution in a particular way.”
California’s utilities have already made significant progress toward the state’s goals by reducing electric sector GHG emissions by at least 40 percent since 2006. Much of that progress can be ascribed to collaborating with the state on the many laws and agencies that govern and regulate the state’s energy sector and promote initiatives aimed at mitigating climate change.
In addition to Senate Bill (SB) 100, also known as the 100 Percent Clean Energy Act of 2018 – a seminal law that put California on the path to 100 percent clean energy by 2045 – two laws were passed in 2021 that supplement the SB 100 planning process. And, California has a full-time legislature, that annually proposes a continual parade of new bills. Last year, 2,400 bills were introduced in the state’s legislature with about 140 of them related to energy, a “pretty average number,” Patrick Welch, CMUA senior director of energy policy and strategy and author of the paper, said.
“When the laws and regulations driving renewable and clean energy procurement are constantly changing, it can harm the financial stability of utilities, causes project delays, jeopardizes climate progress, and impose costs on California utility customers,” the paper said.
“We have strong foundational clean energy laws in California with a robust planning process to pave the road to 100% clean energy. If legislators want to create new laws, we think they should be looking at removing barriers, and should be cautious about imposing new requirements that change the rules of the game,” Welch said.
“Predictability doesn’t mean just saying, ‘No,’” Moline said. “We want new laws that help achieve goals already established.”
The paper also advises on challenges that the state’s clean energy goals will present to affordability. Meeting the state’s 2045 target will require more than doubling the energy resources on the grid, including nearly 120 gigawatts (GW) of new clean resources, including utility-scale solar, batteries, and wind farms, and potentially up to 173 GW of new resources.
That “record-breaking” pace of resource expansion over the next 25 years “will come at a cost” of about an additional $4.6 billion annually by 2045 charged to California ratepayers, the paper said, adding that eliminating all fossil-fuel combustion for electricity generation would cost another $8 billion every year.
Citing a Legislative Analyst’s Office report from 2017, the CMUA paper noted that electric rates in California were about 50% higher than the national average. There are multiple factors contributing to those rates, including how fixed costs are recovered, declining energy consumption due to energy efficiency implementation, and state mandates such as the state’s renewable portfolio standard and its carbon dioxide cap-and-trade program.
CMUA also cited a February 2021 paper released by the California Public Utilities Commission that found that rate and bill increases could make other climate policy goals more difficult to achieve.
And a joint agency report to the governor, said that 2021-2030 overall bundled residential rate forecasts for California’s three large investor-owned utilities are expected to grow at a pace that exceeds inflation for many years in the coming decade.
Those concerns could be compounded as the state turns to electrification to address emissions reductions in other parts of the economy, such as the transportation sector, Moline said. “If rates ratchet up too much, people are not going to want to switch to those technologies,” such as adopting electric vehicles. If legislators and regulators are not paying attention to those problems, we want to make sure they are on the marquee,” Moline said.
And while public power utilities such as the Los Angeles Department of Water and Power, the Sacramento Municipal Utility District and the Glendale Department of Water & Power have made progress toward reducing GHG emissions, the paper said that they also face more challenges as the level of renewable and clean resources on their systems grow, particularly as they approach the last 10 percent of the 100 percent goal.
“It will be particularly important, as utilities meet their 2030, 60% renewable energy goals and continue to plan for 100% clean energy by 2045, for there to be latitude and flexibility in resource selection,” Welch said. “As we approach those thresholds, having a narrow focus doesn’t work from a reliability or cost standpoint.”
“A lot of low hanging fruit has been picked,” Moline said. So, it will be important to have flexibility with respect to the “buckets” that currently specify acceptable types of renewable resources. “Are we stuck in some old school idea or are we open to innovating?” he asked, noting that CMUA is advocating for hydropower to be counted toward meeting emission reduction goals above the 60 percent threshold.
In short, the policy paper should serve as a guideline for lawmakers and regulators, Moline said. The clean energy principles in the paper will move the state toward its goals “faster and with a solid foundation of outstanding service to the people of California,” he said.